March 1, 2010 - Little Rock, Arkansas - Dillard's, Inc. (DDS-NYSE) (the "Company" or "Dillard's") announced operating results for the 13 and 52 weeks ended January 30, 2010. This release contains certain forward-looking statements. Please refer to the Company's cautionary statement regarding forward-looking information included below under "Forward-Looking Information".
Dillard's Chairman of the Board and Chief Executive Officer, William Dillard, II, commented, "We are very pleased with our solid fourth quarter operating performance marked by gross margin improvement of 820 basis points of sales and continued cost reduction. Additionally, we achieved strong cash flow from operations for the year as well as notable year-over-year reductions in inventory and debt. Moving ahead, we will maintain our disciplined approach to these areas while effecting continued merchandise mix improvements to further strengthen our appeal to the Dillard's customer."
Highlights of the 13 and 52 weeks ended January 30, 2010 included:
Net Income - 13 Weeks
Net income for the 13 weeks ended January 30, 2010 was $79.5 million, or $1.08 per share, compared to a net loss for the 13 weeks ended January 31, 2009 of $149.3 million, or $2.03 per share. Included in net income for the 13 weeks ended January 30, 2010 are the following items:
Included in net loss for the 13 weeks ended January 31, 2009 are the following items:
Net Income - 52 Weeks
Net income for the 52 weeks ended January 30, 2010 was $68.5 million, or $0.93 per share, compared to a net loss for the 52 weeks ended January 31, 2009 of $241.1 million, or $3.25 per share. Included in net income for the 52 weeks ended January 30, 2010 are the following items:
Included in net loss for the 52 weeks ended January 31, 2009 are the following items:
non-cash pretax asset impairment and store closing charges of $197.9 million ($136.5 million after tax or $1.84 per share).
Net Sales/Total Revenues
Net sales for the 13 weeks ended January 30, 2010 were $1.834 billion compared to net sales for the 13 weeks ended January 31, 2009 of $2.039 billion. Net sales for the 52 weeks ended January 30, 2010 were $6.095 billion compared to net sales for the 52 weeks ended January 31, 2009 of $6.831 billion. Net sales include the operations of CDI Contractors, LLC ("CDI"), a former equity method joint venture investment. The Company purchased the remaining 50% interest of CDI on August 29, 2008.
Total merchandise sales, excluding CDI, for the 13-week period ended January 30, 2010 were $1.794 billion, declining 9% compared to $1.979 billion for the 13-week period ended January 31, 2009. Merchandise sales in comparable stores declined 8% for the 13-week period ended January 30, 2010.
Total merchandise sales (excluding CDI) for the 52-week period ended January 30, 2010 were $5.890 billion, declining 13% compared to $6.743 billion for the 52-week period ended January 31, 2009. Merchandise sales in comparable stores declined 10% for the 52-week period ended January 30, 2010.
Included in total revenues for the 13 and 52-week periods ended January 30, 2010 is a $5.7 million pretax gain ($3.6 million after tax or $0.05 per share) related to proceeds received from settlement of the Visa Check/Mastermoney Antitrust litigation.
Gross margin from retail operations (which excludes CDI) improved approximately 820 basis points of sales during the 13 weeks ended January 30, 2010 compared to the 13 weeks ended January 31, 2009 due to the Company's focused inventory management efforts which resulted in lower inventory levels and decreased markdown activity. Gross margin from retail operations for the 52-week period ended January 30, 2010 improved approximately 410 basis points of sales due to the same efforts.
Inventory in both total and comparable stores declined 5% at January 30, 2010 compared to January 31, 2009.
Advertising, Selling, Administrative and General Expenses
Advertising, selling, administrative and general expenses ("operating expenses") declined $50.8 million and $288.6 million for the 13 and 52 week periods ended January 30, 2010, respectively. The improvement is primarily the result of the Company's cost control measures combined with store closures. Notable areas of reduction during the fourth quarter of 2009 were payroll and advertising expenses.
Interest and Debt Expense
Net interest and debt expense declined $3.5 million for the 13 weeks ended January 30, 2010 compared to the 13 weeks ended January 31, 2009 primarily due to lower average debt. Interest and debt expense was $18.2 million and $21.7 million during the 13 weeks ended January 30, 2010 and January 31, 2009, respectively. Interest and debt expense for the 52 weeks ended January 30, 2010 declined $14.8 million to $74.0 million from $88.8 million during the 52 weeks ended January 31, 2009 primarily due to lower average debt.
As of January 30, 2010, there were no short-term borrowings outstanding under the Company's $1.2 billion revolving credit facility. The credit agreement expires on December 12, 2012, and there are no financial covenants under this facility provided its availability exceeds $100 million. Letters of credit totaling $89.6 million were outstanding under the revolving credit facility as of January 30, 2010.
During the 13 weeks ended January 30, 2010, Dillard's closed the following locations:
Including the activity noted above, the Company closed six underperforming stores during the fiscal year ended January 30, 2010 totaling 811,000 square feet. Dillard's remains committed to closing underperforming stores where appropriate.
Dillard's plans to open the following two new locations during the 2010 fiscal year:
At January 30, 2010, the Company operated 297 Dillard's locations and 12 clearance centers spanning 29 states and an Internet store at www.dillards.com.
The foregoing contains certain "forward-looking statements" within the definition of federal securities laws. The following are or may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995: statements including (a) words such as "may," "will," "could," "believe," "expect," "future," "potential," "anticipate," "intend," "plan," "estimate," "continue," or the negative or other variations thereof, and (b) statements regarding matters that are not historical facts. The Company cautions that forward-looking statements contained in this report are based on estimates, projections, beliefs and assumptions of management and information available to management at the time of such statements and are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise. Forward-looking statements of the Company involve risks and uncertainties and are subject to change based on various important factors. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements made by the Company and its management as a result of a number of risks, uncertainties and assumptions. Representative examples of those factors include (without limitation) general retail industry conditions and macro-economic conditions; economic and weather conditions for regions in which the Company's stores are located and the effect of these factors on the buying patterns of the Company's customers, including the effect of changes in prices and availability of oil and natural gas; the availability of consumer credit; the impact of competitive pressures in the department store industry and other retail channels including specialty, off-price, discount, internet, and mail-order retailers; changes in consumer spending patterns, debt levels and their ability to meet credit obligations; adequate and stable availability of materials, production facilities and labor from which the Company sources its merchandise; changes in operating expenses, including employee wages, commission structures and related benefits; system failures or data security; possible future acquisitions of store properties from other department store operators; the continued availability of financing in amounts and at the terms necessary to support the Company's future business; fluctuations in LIBOR and other base borrowing rates; potential disruption from terrorist activity and the effect on ongoing consumer confidence; epidemic, pandemic or other public health issues; potential disruption of international trade and supply chain efficiencies; world conflict and the possible impact on consumer spending patterns and other economic and demographic changes of similar or dissimilar nature. The Company's filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the fiscal year ended January 31, 2009, contain other information on factors that may affect financial results or cause actual results to differ materially from forward-looking statements.
Julie J. Bull